A Personal Insolvency Agreement, otherwise known as a PIA, is a flexible arrangement between debtors and their creditors. It involves a debtor putting forward a proposal as to how their financial affairs should be administered with a view to ensuring that creditors receive a dividend in respect of their debts.

A PIA will only come into operation if it has been accepted by a special resolution at a meeting of creditors – meaning a majority in numbers and at least 75% in value must vote in favour of the PIA.

Partner, Michael Lhuede and Senior Associate, Ben Hartley discuss the recent Federal Court decision of AMWU v Beynon that dealt with directors’ personal liability for the payment of employee entitlements.

Introduction

Insolvency practitioners need to be aware of the potential for incurring personal liability under civil penalty provisions for contraventions of the Fair Work Act and how they can protect themselves from claims when accepting appointments.

The recent Australian Federal Court decision of Yu v STX Pan Ocean Co Ltd (South Korea) in the matter of STX Pan Ocean Co Ltd (receivers appointed in South Korea) [2013] FCA 680 has the effect of allowing the arrest of a ship in Australia, despite the operation of the Cross Border Insolvency Act 2008 (Cth) which incorporates the United Nations Model Law on cross border insolvency into Australian law.

The Minister for Justice and Equality has brought more provisions of the Insolvency Act 2012 (the Act) into force and has designated 1 March 2013 as the establishment day of the Insolvency Service of Ireland.

Under the Personal Insolvency Act 2012 (Commencement) (No. 2) Order 2013, the following provisions of the Act came into operation on 1 March 2013:

This Act provides for the winding up of IBRC, the appointment of a Special Liquidator and other connected matters. This legislation was signed into law by the President on 7 February 2013.

The Minister for Justice and Equality has made an order which sets the 18th day of January, 2013, as the date on which Part 6 (Specialist Judges of the Circuit Court) of the Personal Insolvency Act 2012 comes into operation.

On the 12 December, the European Commission announced the proposal to update Council Regulation 1346/2000 on insolvency proceedings. They also announce a separate initiative whereby it will be highlighting the differences between national laws that have the greatest potential to hamper an efficient insolvency legal framework across the EU.

This Q&A focuses on the need to modernise the EU Insolvency Regulation to facilitate the restructuring of businesses in financial difficulty.

Questions include: why do the current rules need updating, what is the impact of the insolvency rules on the economy, how many businesses are affected and what are the next steps?

On 26 December last, the Personal Insolvency Act 2012 was signed into law by the President.

The various provisions of the Act will come into force through commencement orders which will be made by the Minister for Justice. It is expected that certain sections of the Act relating to its Establishment Day and related provisions, will be commenced shortly.

The remaining provisions will then come into operation on a phased basis under Section 1(2) of the Act, as designated by orders to be made by the Minister.

The Personal Insolvency Bill has now passed through the Dail and will commence in the Seanad. The Minister for Justice has commented that the intention is still to have the Bill enacted by Christmas.